Notes - Integrated Annual Report and Remuneration Report 2019

1.Accounts Receivables

CHF millions	31.12.2019	31.12.2018

Gross receivables	118.5	127.9
Value adjustments	– 2.9	– 1.7
Net receivables	115.6	126.2

2.Other Short-Term Receivables

CHF millions	31.12.2019	31.12.2018

VAT (value added tax) credit	4.1	3.5
Withholding tax credit	2.8	2.4
Other short-term receivables	3.3	3.2
Total	10.2	9.1

3. Inventories

CHF millions	31.12.2019	31.12.2018

Raw materials	13.8	12.3
Materials and supplies	48.4	43.6
Work-in-progress	3.1	3.4
Finished goods, merchandise	107.2	105.3
Advance payments	3.6	0.3
Value adjustments	– 39.5	– 38.8
Total	136.6	126.1

4.Accruals

CHF millions	31.12.2019	31.12.2018

Ongoing income tax (credit)	0.4	2.4
Other active accruals	1.0	3.6
Total	1.4	6.0

5. Tangible Assets

CHF millions
	Real Estate & Buildings Non- operating	Real Estate & Buildings operating	Furnaces Equipment Prod. Facilities Moulds	Other Tangible Assets	Adance Payments & Assets Under Construction	Total
Acquisition Value
As per 1.1.2018	75.4	302.7	826.6	39.9	13.7	1 258.3
Additions	–	6.4	54.0	2.6	51.2	114.2
Disposals	–	– 1.5	– 50.9	– 1.2	–	– 53.6
Reclassifications	–	2.4	45.0	0.7	– 45.5	2.6
Foreign exchange differences	– 0.1	– 9.8	– 29.3	– 1.2	– 0.6	– 41.0
As per 1.1.2019	75.3	300.2	845.4	40.8	18.8	1 280.5
Additions	0.1	1.9	29.1	1.5	88.5	121.1
Disposals	–	– 0.4	– 29.2	– 1.7	–	– 31.3
Reclassifications	–	0.9	64.8	0.7	– 62.9	3.5
Foreign exchange differences	– 0.1	– 6.6	– 14.5	– 0.6	– 1.1	– 22.9
As per 31.12.2019	75.3	296.0	895.6	40.7	43.3	1 350.9
Accumulated Depreciation
As per 1.1.2018	29.6	180.2	518.2	31.3	–	759.3
Ordinary depreciation	1.0	7.2	59.0	3.1	–	70.3
Disposals	–	– 1.3	– 48.9	– 1.1	–	– 51.3
Reclassifications	–	– 0.2	2.8	–	–	2.6
Asset impairments*	–	–	0.2	–	–	0.2
Foreign exchange differences	– 0.1	– 5.4	– 17.5	– 0.9	–	– 23.9
As per 1.1.2019	30.5	180.5	513.8	32.4	–	757.2
Ordinary depreciation	1.0	7.0	64.9	2.8	–	75.7
Disposals	–	– 0.2	– 28.7	– 1.6	–	– 30.5
Reclassifications	–	–	3.5	–	–	3.5
Asset impairments*	–	–	–	–	–	–
Foreign exchange differences	–	– 3.9	– 9.9	– 0.4	–	– 14.2
As per 31.12.2019	31.5	183.4	543.6	33.2	–	791.7

Book Value
As per 1.1.2019	44.8	119.7	331.6	8.4	18.8	523.3
As per 31.12.2019	**43,8	**112,6	352.0	7.5	43.3	559.2

* The asset impairments relate to adjustments to the residual values of production facilities.

** This includes vacant real estate plots valued at CHF 3.4 million (2018: CHF 3.6 million).

As per 31.12.2019 payments on assets under construction amounted to CHF 7.4 million (2018: CHF 5.2 million).

6.Financial Assets

CHF millions	Note	31.12.2019	31.12.2018

Employer's contribution reserves	30	12.3	12.4
Assets from pension funds		2.0	1.9
Deferred taxes	23	1.5	1.4
Participations in associated companies		0.5	0.5
Other financial investments		2.2	2.3
Total		18.5	18.5

7.Intangible Assets

CHF millions
	Software	Software in Development	Other Intangible Assets	Total
Acquisition Value
As per 1.1.2018	46.9	1.8	1.3	50.0
Additions	0.6	0.8	–	1.4
Disposals	– 0.1	–	–	– 0.1
Reclassifications	0.4	– 0.4	–	–
Foreign exchange differences	–	– 0.2	–	– 0.2
As per 1.1.2019	47.8	2.0	1.3	51.1
Additions	2.0	0.5	0.1	2.6
Disposals	– 0.5	–	–	– 0.5
Reclassifications	1.1	– 0.9	– 0.2	–
Foreign exchange differences	–	–	–	–
As per 31.12.2019	50.4	1.6	1.2	53.2
Accumulated Amortisation
As per 1.1.2018	41.0	–	1.2	42.2
Ordinary amortisation	3.1	–	–	3.1
Disposals	– 0.1	–	–	– 0.1
Reclassifications	–	–	–	–
Asset impairments	–	–	–	–
Foreign exchange differences	–	–	– 0.1	– 0.1
As per 1.1.2019	44.0	–	1.1	45.1
Ordinary amortisation	2.0	–	–	2.0
Disposals	– 0.4	–	–	– 0.4
Reclassifications	–	–	–	–
Asset impairments	–	–	–	–
Foreign exchange differences	–	–	–	–
As per 31.12.2019	45.6	–	1.1	46.7

Book Value
As per 1.1.2019	3.8	2.0	0.2	6.0
As per 31.12.2019	4.8	1.6	0.1	6.5

There were no licences, patents or brands in 2018 or 2019.

The acquisition in Italy gave rise to goodwill in the amount of CHF 16.8 million in the 2015 fiscal year, which was charged directly to the shareholders’ equity at the time of the acquisition. Were this to have been capitalised and amortised across a lifespan of five years, the shareholders’ equity would be CHF 754.0 million as at 31 December 2019 (2018: CHF 716.8 million) and the 2019 consolidated profit would be CHF 69.6 million (2018: CHF 54.7 million). Amortisation in the reporting year would have amounted to CHF 3.4 million (2018: CHF 3.4 million).

The remaining book value of the goodwill would amount to CHF 1.8 million as at 31 December 2019 (2018: 5.2 million). There were no asset impairments in either the reporting year or the previous year.

8.Short-Term Financial Debts

As at 31 December 2018, this item mainly included a bank loan of CHF 44.9 million (EUR 40.0 million), which has an interest rate of 0.7% and runs until 30 June 2019.

9.Other Short-Term Liabilities

CHF millions	31.12.2019	31.12.2018

Prepaid recycling fees	4.6	4.5
Advance payments	1.1	1.2
Liabilities to employees	5.4	4.9
Other short-term liabilities	12.0	9.7
Total	23.1	20.3

10.Deferrals

CHF millions	31.12.2019	31.12.2018

Ongoing liable income taxes	2.8	4.1
Unclaimed vacations and overtime compensations	5.3	7.0
Other deferrals	14.5	12.0
Total	22.6	23.1

11.Short-Term Provisions

CHF millions
	Service Anniversary	Legal Proceedings	Guarantee Warranty	Other	Total
As per 1.1.2018	0.4	0.1	0.7	2.5	3.7
Reclassifications	–	–	–	–	–
Formations	0.3	–	0.2	1.2	1.7
Liquidations	– 0.1	–	–	– 0.6	– 0.7
Utilisations	– 0.1	–	– 0.3	– 1.7	– 2.1
Foreign exchange differences	–	–	–	–	–
As per 1.1.2019	0.5	0.1	0.6	1.4	2.6
Reclassifications	–	–	–	–	–
Formations	0.3	–	1.0	3.5	4.8
Liquidations	–	–	–	0.2	0.2
Utilisations	– 0.1	–	– 0.2	– 2.7	– 3.0
Foreign exchange differences	–	–	– 0.2	–	– 0.2
As per 31.12.2019	0.7	0.1	1.2	2.4	4.4

12.Long-Term Financial Debts

This category comprises loans that fall due for repayment as follows:

CHF millions	31.12.2019	31.12.2018

Residual period
– 1 to 2 years*	2.5	2.5
– 3 to 5 years**	6.7	5.9
– > 5 years***	12.5	–
Total	21.7	8.4

* in CHF; interest rate 0.7% (2018: 0.7% to 1.995%)

** in CHF; interest rate between 0.65% to 1.85% (2018: 0.85% to 1.85%)

*** in CHF; interest rate 0.99%

Short-term financial debts amounting to CHF 8.7 million were prolonged.

13.Long-Term Provisions

CHF millions
	Deferred Tax Liabilities	Service Anniversaries	Pensions	Total
As per 1.1.2018	21.4	4.7	14.8	40.9
Reclassifications	–	–	–	–
Formations	2.0	–	2.7	4.7
Liquidations	– 3.3	– 0.2	–	– 3.5
Utilisations	–	– 0.1	– 1.9	– 2.0
Foreign exchange differences	– 0.6	– 0.1	– 0.7	– 1.4
As per 1.1.2019	19.5	4.3	14.9	38.7
Reclassifications	–	–	–	–
Formations	1.4	0.9	2.1	4.4
Liquidations	– 4.2	– 0.1	– 0.1	– 4.4
Utilisations	–	–	– 1.8	– 1.8
Foreign exchange differences	– 0.3	– 0.1	– 0.4	– 0.8
As per 31.12.2019	16.4	5.0	14.7	36.1

Deferred Tax Liabilities: details see here.

Service Anniversaries: Provisions are formed in respect to remuneration for long service to the company as defined in the Employment Regulations. These provisions, which take into account country-specific corrective factors for the staff turnover, were discounted between 0% to 15% (2018: 0% to 15%) as per balance sheet date.

14.Share Capital

The share capital is structured as follows:

CHF millions	31.12.2019	31.12.2018

220 480 Bearer shares (2018: 220 480) à nominal CHF 50.00 (issued and paid in full)	11.0	11.0
880 000 Registered shares (2018: 880 000) à nominal CHF 10.00 (issued and paid in full)	8.8	8.8
Total	19.8	19.8

The bearer shares (Security no. 622 761) are listed on the SIX Swiss Exchange, Swiss Reporting Standard, with a year end closing price of CHF 3,040.00 (2018: CHF 2,010.00). Their total capitalisation equalled CHF 1,205.3 million (2018: CHF 796.9 million). Each registered and bearer share holds one voting right.

Major Shareholders with > 3% of Voting Rights

	31.12.2019	31.12.2018

Cornaz AG-Holding	68.7%	67.2%
Elisabeth Leon-Cornaz	5.2%	5.2%
La Licorne Holding SA	4.6%	4.6%

Shareholder's agreements exist between these and other persons and/or their shareholders (details see here).

15.Minority Interests

Since 27 March 2019, Vetropack Austria Holding AG has held 100% of the shares in PrJSC Vetropack Gostomel (31 December 2018: 85.3%).

16.Segment Reporting

The segment reporting used at the top management level for corporate management has just one significant
segment ("Glass packaging"). The secondary segment "Speciality glass" comprises only trade revenue in Switzerland (Müller + Krempel Ltd).

Net Sales per Country

CHF millions
	Change	2019	2018
Glass Packaging
– Switzerland	0.9%	74.5	73.8
– Austria	2.1%	203.0	198.9
– Czech Republic	0.3%	73.6	73.4
– Croatia	– 2.7%	124.4	127.9
– Slovakia	27.9%	60.5	47.3
– Ukraine	19.1%	81.7	68.6
– Italy	– 4.0%	87.0	90.6
Speciality Glass (Switzerland)	0.0%	10.2	10.2
Total	3.5%	714.9	690.7

Vetropack Group does not publish details on its segment results, as there is a significant risk that this could cause competitive disadvantages. The markets in which the Business Units of Vetropack operate are narrow niche sectors with few, primarily private suppliers, who could draw conclusions about the margins and prices from the segment results.

17.Other Operating Income

CHF millions	2019	2018

Material and energy sales	3.7	3.3
Ancillary services	0.9	0.8
Real estate management income	0.5	0.6
Internally produced additions to plant and equipment	1.7	1.1
Supplier commissions	1.8	1.2
Allocations disposal fees	1.8	1.5
Other income	2.2	3.7
Total	12.6	12.2

18.Cost of Materials

CHF millions	2019	2018

Raw material	106.5	102.9
Merchandise	9.5	6.9
Total	116.0	109.8

19.Personnel Expenses

CHF millions	2019	2018

Wages and salaries	127.4	121.4
Social benefits	36.2	34.6
Other personnel expenses	6.1	4.4
Total	169.7	160.4

Headcount by country (final count)

	Change	31.12.2019	31.12.2018

Switzerland	4.6%	298	285
Austria	2.4%	714	697
Czech Republic	3.3%	467	452
Croatia	2.1%	588	576
Slovakia	1.1%	378	374
Ukraine	– 2.0%	631	644
Italy	10.3%	290	263
Total	2.3%	3 366	3 291

Headcount by country (average)

	Change	2019	2018

Switzerland	1.7%	293	288
Austria	0.7%	710	705
Czech Republic	0.9%	468	464
Croatia	2.4%	588	574
Slovakia	2.2%	378	370
Ukraine	– 0.2%	637	638
Italy	5.3%	276	262
Total	1.5%	3 350	3 301

20.Other Operating Expenses

CHF millions	2019	2018

Maintenance and repairs	33.2	32.1
Moulds	6.3	6.5
Packaging material	29.1	27.1
Transport costs	46.2	49.5
Other administrative and operating expenses	67.9	66.7
Total	182.7	181.9

21. Financial Result

CHF millions	2019	2018

Interest income	0.9	0.7
Interest expenses	– 0.4	– 0.6
Currency exchange gains	5.3	9.9
Currency exchange losses	– 9.4	– 13.7
Other financial income	–	– 0.1
Total	– 3.6	– 3.8

22.Non-Operating Result

CHF millions	2019	2018

Non-operating real estate income	3.9	3.6
Non-operating real estate expenses	– 1.6	– 1.6
Non-operating real estate depreciation / impairments	– 1.0	– 1.0
Other non-operating income / expenses	0.2	– 1.5
Total	1.5	– 0.5

23.Income Taxes

CHF millions	2019	2018

Ongoing income taxes	17.1	14.2
Deferred income taxes	– 2.7	– 0.2
Total	14.4	14.0

Loss carryforwards amounted to CHF 10.0 million (2018: CHF 9.9 million) in total at the end of the reporting year. No loss carryforwards were included in the calculation of the deferred income tax assets (2018: CHF 0.0 million). The impact on the tax on earnings of unrecognised loss carryforwards was CHF 2.1 million in the reporting year (2018: CHF 2.4 million). In the reporting year no unrecognised loss carryforwards were used (2018: CHF -3.7 million). There was no impact in the reporting year on income taxes due to the use of unrecognized losses carried forward (2018: CHF -0.7 million). In the reporting year, as in the previous year, there was no impact due to the use or expiry of unrecognised loss carryforwards.

The country-specific tax rates that apply to the calculation of the deferred taxes on earnings range from 11.0% to 25.0% (2018: 7.8% to 27.9%).

The weighted average tax rate to be applied based on the ordinary result is 20.0% (2018: 18.3%).

24.Results per Participation Right

The undiluted result per share is calculated by dividing the consolidated profit for the applicable year that is to be allocated to the shareholders of the Vetropack Group by the weighted average number of outstanding shares.

	2019	2018

Consolidated profit allocated to the shareholders of the Vetropack Group in million CHF	73.0	58.1

Weighted number of outstanding bearer shares for undiluted result per share	396 480	396 480
Weighted number of outstanding registered shares for undiluted result per share	1 982 400	1 982 400

Undiluted result per bearer share in CHF	184.1	146.5
Undiluted result per registered share in CHF	36.8	29.3

The diluted result per share is calculated in the same way as the undiluted result for both share types, as no dilution potential exists for either.

25.Investments

Investment Breakdown:

CHF millions	2019	2018

Switzerland	2.5	3.2
Austria	8.0	49.1
Czech Republic	9.2	5.8
Croatia	24.6	5.8
Slovakia	28.5	33.9
Ukraine	26.6	8.6
Italy	21.7	7.8
Total	121.1	114.2

26.Off Balance Sheet Transactions

CHF millions	31.12.2019	31.12.2018

Recourse from drafts	–	–
Letters of comfort	2.5	2.5
Guarantees	0.6	0.5
Off balance sheet leasing	0.9	1.6
Total	4.0	4.6

Contingent liabilities are stated at their maximum amounts (full sum of liability).

The repayment structure of the off balance sheet leasing liabilities is as follows:

CHF millions	31.12.2019	31.12.2018

Maturity
– 1 to 2 years	0.8	0.4
– 3 to 5 years	0.1	1.2
– > 5 years	–	–
Total	0.9	1.6

27.Pledged Assets

The following assets' book values are used as collateral to secure bank credits and mortgages:

CHF millions	31.12.2019	31.12.2018

Accounts receivables	10.4	7.4
Marketable securities	–	0.3
Real estate	30.1	31.3
Total	40.5	39.0

28.Derivative Financial Instruments

As at 31 December 2019, Vetropack Holding Ltd has open currency swaps in the amount of EUR 7.6 million. No derivative financial instruments were held as at the reporting date in the previous year.

29.Transactions with Closely Associated Persons

CHF millions	31.12.2019	31.12.2018
Pension Funds
Accounts receivables	–	–
Accounts payables	0.2	0.2
Interest expenses	–	–
Associated Companies
Accounts receivables	–	–
Accounts payables	0.8	0.8
Capitalised services	–	–
Service income	–	–
Equity income	–	–
Glass cullet purchasing expenses	– 4.0	– 4.2
Maintenance and repairs expenses	– 0.2	– 0.2
Other service expenses	–	–
Equity valuation expenses	–	–
Other Closely Associated Persons
Accounts receivables	–	–
Accounts payables	0.2	0.2
Investments in tangible assets	–	–
Distribution income	–	–
Packaging material expenses	– 0.5	– 0.6
Distribution expenses	–	–
Service expenses	–	–
Interest expenses	–	–
Tangible assets sales	–	–

The classification of "Other Closely Associated Persons" includes transactions with the following natural persons and legal entities, irrespective of the Vetropack Company in which they occurred: shareholders with voting rights of more than 20%, BoD members, MB members and all companies that are directly or indirectly controlled by these persons.

Transactions with closely associated persons and companies are handled on the basis of normal market terms and conditions.

30.Pension Fund

There exist various pension schemes within the Group, which are based on regulations of their respective countries. In Switzerland, these are contributor funded schemes in accordance with Swiss pension fund law; abroad they are state-guaranteed contribution-based pension schemes. The schemes are financed either through contributions to legally independent institutions and trusts or by registering the pension fund liability in the financial statements of the Group companies.

Employer's Contribution Reserves

Company Sponsored Pension Funds

CHF millions	2019	2018

Nominal value 31.12.	13.0	13.1
Utilisation waiver 31.12.	–	–
Other value adjustments 31.12.	–	–
Discounting effects 31.12.	– 0.7	– 0.7
Book value 31.12.	12.3	12.4

Assets and Liabilities from Pension Funds

CHF millions
	Company Sponsored Pension Funds	Pension Funds without Excess / Deficiency Cover	Pension Funds with Excess / Cover	Pension Funds without own Assets	Total
Excess / deficiency cover 31.12.2019	11.2	–	22.3	–	33.5
Economic utilisation / liabilities 31.12.2018	–	–	–	– 12.4	– 12.4
Economic utilisation / liabilities 31.12.2019	–	–	–	– 12.1	– 12.1
Changes 2019	–	–	–	– 0.3	– 0.3
Contributions restricted to the period*	–	–	2.4	2.2	4.6
Pension expenses 2018	– 0.8	–	2.3	2.2	3.7
Pension expenses 2019	–	–	2.4	1.9	4.3

* including changes in employer's contribution reserves

The values for pension funds of Swiss companies are based on previous years' financial statements, whereby all substantive decisions in the current fiscal year are taken into account. The uncommitted funds are not available to the Vetropack Group.

CHF millions	2019	2018

Key influential factors
– Changes in employer's contribution reserves	0.1	– 0.8
– Changes in economic utilisation / liabilities	– 0.3	– 0.3
– Pension fund contributions	4.5	4.8
Total Pension Fund Expenses	4.3	3.7

31.Events after the Balance Sheet Date

No significant events occurred between the balance sheet date and the Board of Directors approving the consolidated financial statements on 10 March 2020 that could negatively affect the declarations made in the 2019 annual financial statements.